Airdrop

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Airdrop is a term for a large-scale distribution of free cryptocurrency tokens into a digital community. In an airdrop, a cryptocurrency business deposits tokens into the wallets that it has access to. Often the purpose of the airdrop is lead generation, whereby cryptocurrency traders have to reveal their wallet addresses and sometimes their identities to the airdropping business in order to allow the transaction.[1]

In February 2014, an Icelandic resident issued a cryptocurrency called the auroracoin, which the issuer wanted to deposit into accounts for each citizen of Iceland to use as an alternative to the national fiat currency. This was the first widely reported airdrop. As a monetary initiative the auroracoin quickly failed.[2] Four and a half years later, in November 2018, CoinMarketCap reported auroracoin as the 269th most actively traded cryptocurrency with $22,374,321 traded over the most recent month. Auroracoin was the 45th largest cryptocurrency in the world at the time with a market capitalization of $181,491,251.[3]

An airdrop can provide a number of benefits to the creators of a cryptocurrency, including promotion and increasing the price of the token.[4] Some argue it's also a way of getting around the SEC's ruling that ICOs are securities; if digital assets are given away for free, they can't technically be considered securities. Though the creators of the token don't make money by giving them away for free, the token still gets propagated, leading to large numbers of people adopting it for trade.[5] Airdrops can also come in the form of forks.[6]

Promoting both itself as well as a cryptocurrency, Blockchain.com announced on November 6, 2018 that it would airdrop $125 million worth of Stellar (XLM) over a six month period by depositing about $25 worth of XLM into each new Blockchain customer's wallet and otherwise distributing any remaining XLM to current customers. The airdrop started on November 11, 2018. The price of XLM rose about 10 percent after the announcement and maintained the price gain for at least the 24 hours after the airdrop began.[7] Blockchain.com said in an official blog post that it was the largest airdrop ever.[8]

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